Double taxation relief with Hong Kong

Dear HMRC admin, I am residing in Hong Kong and working for a Hong Kong based airline. My personal income is in HK dollars and received in Hong Kong. Last year my family moved to the UK and I come visit them sometimes on personal terms and also via work trips. I have not exceeded the 183 days for the tax year 22/23, however I have exceeded the 120 days in Statutory Residence Test (SRT) with 2 family ties. Under this test I am a deemed UK tax resident for the tax year. But I am also aware there is a Double Taxation Relief treaty between HK and the UK. In the treaty it mentions 183 days as the only criteria (without referencing to the SRT, etc.). And by the terms of the treaty, my foreign income is not subject to UK tax. These 2 provisions sound a bit conflicting. Can I therefore ask, which of the above overrides the other? And more specifically, is my Hong Kong income subject to taxation by the UK, and do I need to file an assessment for UK tax for 2022/23? Thanks for your help in advance.

Hi Magikarp,
Article 14 of the UK/Hong Kong DTA advises that if you are resident in Hong Kong, you will only be taxable in Hong Kong, unless that employment is exercised in the UK,
Then the income arising from employment while in the UK may be taxable in the UK.  
Article 14(3) then advises that employment exercised aboard an aircraft or ship operated in international traffic, by an enterprise of Hong Kong, may be taxed in Hong Kong.
Thank you. 

Hi HMRC admin I have a similar situation as Magikarp and I would like to double confirm a few things. I lived in the UK for over 120 days, but less than 183 days for the tax year. After that, I moved back to Hong Kong for the rest of the days. Since I was a UK tax resident before, and I satisfied the Statutory Residence Test (SRT) with 1 tie, I would be a UK tax resident for the tax year. According to your explanation above, my employment income in Hong Kong will only be taxable in Hong Kong unless it is exercised in the UK. In this situation, do I still need to file a self assessment tax return, declare my employment income in Hong Kong and then claim the tax relief under the tax treaty? Or I could just leave it and don't need to do anything? Thank you and look forward to your reply.

Hi Psy Duck,
If you qualify for split year then you only report any foreign income for the UK part of the year:
RDRM12000 - Residence: The SRT: Split year treatment: Contents
If you do not qualify then you will need to report all your foreign income to the UK:
Tax on foreign income
The guidance at RDRM12150 at www.gov.uk will help you work out if split year treatment applies. if not, you need to declare all your income and then claim foreign tax credit relief.
. 

 


 

Hi HMRC, Im new to the forum and would like further information on the above quesitons. I was previously a UK tax resident, due to covid, the Hong Kong company I work for shut down our overseas offices, allowing those with HK residency to move to HK and remain employed. Having left the UK in 2021, I have not worked in the UK since. The original question refers to the DTA and if ONLY the DTA applies to the HK income? OR does the SRT ALSO considered when considering a Hong Kong salary/income? For the HK based income, I would like to know if only the DTA applies in this case, or do I have to also consider the SRT? With regards to the SRT, I was under the impression that this applied to my worldwide income and therefore my HK salary would be subject to UK tax, should I be deemed a UK tax resident when considering the SRT. With my family in the UK (3 ties; family, home, 90 day), I spend =

Hi HMRC1234

Under the terms of the double taxation treaty with Hong Kong, income received for work carried out there is only taxable in Hong Kong and is not taxable in the UK.  This overides any SRT details.

Thank you

Hello HMRC, I hope all is well. I am a resident of England. I have a property in Hong Kong and receive property rental income in 2022-23. May I know if I should pay the income tax to HK first and then to the UK or shall I pay the income tax to the UK? Great to hear about the tax implications and the arrangement. Thank you! A.

Hi,

Article 6 of the tax treaty gives Hong Kong the rights to tax rental income from property located in Hong Kong.  

If you are resident in the UK, you are taxed on your worldwide income on the arising basis.  What this means is that although Hong Kong is allowed to tax your rental income, so is the UK, even if you do not bring the income into the UK.  

To avoid being taxed twice, you can claim a tax credit of up to 100% of the foreign tax paid.  

As an individual, who is resident but not domiciled in the UK, you can opt to use the remittance basis, so that you do not pay tax on income or capital gains not remitted to the UK, but that option has its limitations.  

Guidance note for residence, domicile and the remittance basis: RDR1

Thank you.

Hi HMRC, I am a UK resident moving from HK ten months ago and I am an online tutor teaching students in Hong Kong so all my income are sourced from Hong Kong. The income will be subject to Hong Kong tax. May I know do I need to pay UK tax for that income? Do I need to register as self-employed in UK or fill in any form? I am looking forward to your reply. It would be great to have the information. Thanks in advance.

Hi KENTT

Yes you will be subject to UK income tax on this employment income, but not taxable on it in Hong Kong.  
Article 14 of the UK / HK tax treaty allows for  salaries, wages and other similar remuneration derived by a resident of the UK in respect of an employment shall be taxable only in the UK, unless the employment is exercised in Hong Kong.  
This means that you have to be physically in Hong Kong undertaking this employment, for the income to be taxable in Hong Kong.  (2010 Hong Kong-UK DTA). This foreign income should be declared on a self assessment tax return.  You will need to contact the Hong Kong tax authorities to ensure the income is not taxed.

Thank you